Trump didn’t know the GOP tax bill incentivizes business to offshore jobs

Rebekah Entralgo

Rebekah Entralgo Reporter, ThinkProgress

President Donald Trump was apparently unaware that a provision in his biggest legislative accomplishment encourages corporations to offshore jobs.

Sen. Sherrod Brown (D-OH) spoke with Trump Wednesday night about the closure of at least five General Motors plants, including one assembly plant in Lordstown, Ohio, and filled him in on how the GOP tax bill is partly to blame.

“I reached him last night, he said he wanted to help, I said the first thing you could do is you could take away that tax provision in his tax bill that gives a company a 50 percent off coupon on their taxes,” Brown told CNN’s New Day Thursday. “If you’re producing in Lordstown you pay a 21 percent tax rate, if you move to Mexico you pay a 10.5 percent tax rate, and I told the president to get rid of that tax break that encourages jobs to move overseas.”

The president apparently did not know that was in the tax bill.

It’s difficult to believe that Trump didn’t know a significant result of the GOP tax bill would be a worsening of offshore tax dodging — especially when his own Congressional Budget Office (CBO) said it would. A report in April suggested corporations may be incentivized under the legislation to offshore “tangible assets” like factories and offices, and yes, jobs.

“By locating more tangible assets abroad, a corporation is able to reduce the amount of foreign income that is categorized as GILTI (Global Intangible Low Taxed Income),” the report stated. “Similarly, by locating fewer tangible assets in the United States, a corporation can increase the amount of U.S. income that can be deducted as FDII (Foreign-Derived Intangible Income). Together, the provisions may increase corporations’ incentive to locate tangible assets abroad.”

Those findings echoed previous analysis from non-partisan agencies like like the Institute on Taxation and Economic Policy, which found the Republican Tax Cuts and Jobs Act would make offshore tax dodging even worse than it was before The Center on Budget and Policy Priorities similarly found that the plan is “likely to lead to more outsourcing of U.S. jobs and a larger trade deficit” due to its tax cuts for overseas profits.

Brown had reportedly reached out to the president earlier in the year when the first phase of layoffs at Lordstown occurred, but nothing was done. Now, with a key 2020 re-election campaign on the horizon and a mountain of bad press, Trump seems intent on saving face with voters in the key purple state of Ohio.

Brown told CNN that Trump subsequently expressed an interest in signing onto his American Jobs, American Cars Act that would eliminate the incentive for corporations to move jobs overseas and provide consumers with a $3,500 price deduction on a purchase or five-year lease of a new, American-made car.

“He said he wants to fix it, I take him at his word,” Brown said. “I’m working with his trade representative and we’re going to go to town on it in the next few weeks.”

Only time will tell if the president will follow through on his word to work with Brown, who is exploring a run for president in 2020. Earlier in the week Trump blamed Brown, but not Ohio Republican Sen. Rob Portman, for the GM closures.

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Reposted from Think Progress

Posted In: Allied Approaches

Union Matters

What's Wrong with GM?

Corporations’ stranglehold on our economy was put on further display last week, when General Motors announced it was laying off up to 14,000 workers across North America.

On a special episode of “State of the Unions,” co-host Tim Schlittner talked with AFL-CIO Industrial Union Council Executive Director Brad Markell, a lifelong UAW member, about what the layoffs say about the state of the economy as a whole:

Tim Schlittner: “Reading the CEO’s statement, Mary Barra, where she says this is about making GM agile, resilient and profitable, then thinking about all the stock buybacks, thinking about some of the incentives they got in the tax law that just passed. Mary Barra made about $22 million last year—that’s 295 times more than the GM median employee—my feeling is like this is crap. That’s just a crap excuse for hoarding more at the top, at the expense of the workers that make GM go. Am I wrong to say that?”

Brad Markell: “I think there are a couple issues there from my point of view. Mary Barra makes a lot of money and executive pay is out of control in this country. Part of what’s the problem with executive pay is how is it incentivized? It’s not that Mary Barra making $22 million is going to kill the company. It’s what does she do to get there, right? What does she do to make those cuts and—and those things that Wall Street wants to see because so much of it’s stock options—so instead of playing to the real economy, you’re playing to Wall Street. That’s a problem.”

Tim Schlittner: “And the stock went up that day. So Wall Street saw this decision to close these plants and basically took that as a positive sign, which shows to me an economy that is completely out of whack.”

Take a listen to the full episode here.

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